In the wake of disappointing holiday sales, Barnes & Noble is rethinking its Nook strategy, the NY Times reports, citing anonymous sources. As physical bookstores have become a beloved, adorable, but untenable endangered species, kind of like the panda bear, since 2009 B&N has smartly attempted to move its core business into the digital segment. Their Nook e-reader is widely though of as a competitive (maybe even superior) platform to the Kindle, but recent sales have been down, proving that making a cool gadget is no panacea, and maintaining your cool gadget is an ultra-competitive field.
The problem was not so much the extent of the losses, but what the losses might signal: that the digital approach that Barnes & Noble has been heavily investing in as its future for the last several years has essentially run its course.
A person familiar with Barnes & Nobles’s strategy acknowledged that this quarter, which includes holiday sales, has caused executives to realize the company must move away from its program to engineer and build its own devices and focus more on licensing its content to other device makers.
Basically even though the Nook was cool, as a gadget maker B&N can’t compete with Apple, Amazon, and Samsung and their wide variety of apps. In the future, sources told the NYT, B&N will rely more on selling its vast reserves of content—whatever that is—instead of designing hardware.
In another report in USA Today, B&N chairman Leonard Riggio is said to be planning a buyout of the core bookselling business, leaving the Nook division behind.
Leonard Riggio, who also serves as its chairman, told the board of directors that he wants to buy the retail business but not the Nook Media unit that operates the Nook digital business and college bookstores. The retail business includes Barnes & Noble Booksellers and Barnesandnoble.com. The purchase price would be negotiated with the board. The deal will be done mostly in cash and the assumption of "certain liabilities of the company," according to a document filed with the Securities and Exchange Commission. Riggio would provide the equity financing and arrange any debt financing required for the deal.
B&N has no plans to stop making the Nook…for now. But if we were betting people, we’d be thinking that someday you’ll be able to stack it up next to your laserdisc player and Newton.